RetailVision: 'It Always Pays To Be A Little Paranoid'

London said that the consumer electronics retail landscape had never seen as much change as it had in the past five months. But the industry's history suggests the curious and the risk-takers are the ones who win.

"You don't have all the answers," London said. "Unless you are prepared to accept the unknown, you will not be able to make the changes necessary to prosper.

London, who spent 10 of his 35 years of retail experience in leadership positions at Best Buy and is now a consultant, said he remembered Best Buy CEO Brad Anderson insisting on changes to Best Buy's customer approach even in boom times.

"We said, Brad, things are great, you want to change it now?" London recalled. "And he said, we've won the old game. We've won the way business was won in the past. But if we're going to win the future against competitors who aren't the same -- who aren't brick-and-mortar -- we need to change."

London laid out six industry trends he said all retailers need to understand:

1.) Commoditization

"The pace of technology innovation advancement is unfathomable -- it's like a bucking bronco, and you have to hold on for dear life," London said. "Products and services become obsolete faster, and prices drop almost as fast. But this provides you an opportunity to reinvent yourself."

2.) Complexity

"For a supplier, a relationship with a retailer is not just sales and buyer, but a deep understanding of the supply chain, international shipping, accounts receivable and all these other specifics," London said. "In today's world, all of those areas are either profit opportunities or ways to stop profit degradation."

3.) Consolidation

"I think we all see what's happening: Commoditization plus complexity has proven fatal for some manufacturers and retailers," London said. "We live in a Darwinian world -- it pays to always be a little paranoid and a little scared. The talented, the nimble, the risk takers, the changers -- they will survive."

4.) Convergence

"Today it's all about how do I connect the devices I want to deliver the content I want, and I want to do it flawlessly and quickly, when I want," London explained. "I can't tell you how many mp3 players I bought and sold before the iPod. Why does the iPod work so well? It has great content, but it's also easy to do. I plug it in, and it works."

5.) Competition

"Our two competitors in 1996 were Circuit City and Sears," London remembered. "Then came this thing called the Internet, a platform that initially could only deliver information. Then a change agent appeared named [Amazon CEO] Jeff Bezos. My point is: What had been the retail barriers -- retail stores, limited shopping hours, the traditional sales force -- have since been obliterated by the Internet."

6.) Customer

"The customer is more knowledgeable, less loyal to a brand or store, and seeks out recommendations from peer groups," London said. "Customer behavior these days has been described as promiscuous. They all want it on their time schedule."

Best Buy in the past decade started using demographics and psychographics research as part of its customer business analytics. It's the customer aspect where many retailers falter, London argued.

"It all starts with the customer. We say that, but do we really mean it?" London said. "You have to have a real, fact-based understanding of who they are, what they think, how they behave, and what are their met and unmet needs. Too often you try to improve business by doing exactly as you thought it should be done. Take the time and resources to talk to the customers and find out exactly what they want."